Furniture Industry: Looking Inwards for Survival
The Nigerian business environment is one that poses not a small challenge for both big and small concerns. With problems of policy somersault, poor infrastructure, high lending rates, etc, it takes innovativeness, careful planning and tenacity of purpose to keep a business organisation going. With the need for self-sufficiency and to encourage local production in order to create jobs and save foreign exchange, the government a couple of years ago banned the importation of certain goods into Nigeria. For business organisations that lacked vision, the ban marked the end of the road but for some others with good thinking caps, it was a challenge to soar to greater heights, writes Max Amuchie
When democracy was restored in 1999, the challenge the government had to grapple with concerned the economy. It is still the challenge today. There arose a view that to stimulate local production, the importation of some items that can be produced locally should d be banned. This way, employment would be generated and foreign exchange saved.
Two years ago, several items seen as luxury commodities hitherto imported into Nigeria got a ban placed on them. Among the items affected were leather and fabrics. It looked like end of the road for businesses that depended on the importation of furniture. Before this time, Nigerian furniture dealers were importing leather furniture from Italy and some other parts of Europe.
TEKNO Contemporary Furniture, Ikeja, was among the companies affected. What was to be done? It posed a challenge to TEKNO but the company saw in it an opportunity. The main challenge was to achieve the same level of quality of leather furniture imported from Italy using the resources available in Nigeria.
Fortunately for TEKNO, its managing director/CEO, Mr. Fola Omolayole, was for 12 years the managing director Tina George Nig. Ltd, Ikeja, a plastics manufacturing company, before venturing into furniture retailing and manufacturing.
Tina George, which is a family business was producing packaging for cosmetics and pharmaceutical industries but later went into trying times as a result of high cost of production, materials and diesel. Even as he veered into furniture importation and then local manufacturing, Omolayole was still involved in plastics.
Therefore, when the ban on leather products was announced, the next move was to merge the two businesses, that is Tina George and TEKNO.
The thing he did was to open up discussion with Ivars s.p.a. of Italy, which is the largest manufacturer of chair components in Italy. Ivars is known across the world for manufacturing components of swivel chairs.
“We have a working whereby we import metal components of the chairs such as the pump and lever mechanism which cannot be produced in Nigeria. We intend to produce the plastic components locally to add to the metal components that cannot be produced locally. They are going to provide the necessary moulds to enable us produce the plastic components. So only the mechanism that controls the backrest and the seat and metal components will be imported from Ivars. All the plastic components will be manufactured in our plastics company, and that will form up to 70 per cent of the swivel chair. The remaining 30 per cent, which will be imported will be foam, fabrics, etc. The quality will still be the same as the imported ones since the plastic moulds for producing the plastic components and metal components are from Italy. The raw materials can be sourced from petrochemical plants in Nigeria,” Omolayole said.
That is for the long-term and Omolayole said moulds from Ivars couldn’t be manufactured in Nigeria at the moment. Also everything TEKNO will produce would be under licence from Ivars. In the mean time, however, what TEKNO has done is to import most of the components about 70 per cent, from Ivars and is assembling them at the company’s factory in Ikeja with foams and fabrics sourced locally according to specific requirements of individual customers. “The beauty of local production is that it can be customized according to each person’s taste,” Omolayole said.
According to him, before the ban on the importation of leather and fabrics, what many Nigerian furniture importers were doing was to go to some Asian and Far Eastern countries, select companies in these countries that were producing cheap and inferior furniture, bring these sub-standard items into the country. He said a lot of traders prefer to buy the cheapest furniture so as to maximize their profit. “ They sell at low cost but the quality is bad. Some just import the pump and mechanism and build the components and the quality is low”, he further said.
He said in Nigeria, standard has gone up and that a lot of companies and individuals prefer high quality furniture even though the prices, naturally, are higher than prices of inferior furniture. But even then, according to Omolayole, the cost difference TEKNO’s products and the cheap imported ones is just five per cent. In addition, TEKNO offers one-year warranty for free replacement of parts.
On the business climate in Nigeria, Omolayole said labour is cheap and the market, large. These make Nigeria good for business. The problem, he maintained, is that there is infrastructure to support business. He said as a result of the problem of infrastructure, it is difficult to go into manufacturing in Nigeria and compete globally. This has forced many people into trading.
Omolayole said the positive impact of the ban on importation of leather furniture outweigh the negative side. The only negative fallout of it, he said, is that it has made genuine furniture expensive because the cheap ones from abroad still get into the country through smuggling. On the positive side, he said, “it has taught us to look inwards.”
